Albertson's, United await antitrust ruling

The United Supermarket at 1501 E. Amarillo Blvd., Amarillo, pictured, is one of 14 locations around the Texas Panhandle operated by United Supermarkets LLCstores under its United Supermarkets, Market Street and Amigos banners.

Federal antitrust investigators will determine whether enough competition remains in Amarillo and other markets if Albertson’s and United Supermarkets merge, a legal expert said.

The Albertson’s deal to acquire Lubbock-based United Supermarkets — now using the moniker The United Family — hinges on a federal blessing from the Federal Trade Commission or U.S. Department of Justice, said Frank Carroll, a Dallas lawyer who chairs the State Bar of Texas Antitrust and Business Litigation Section.

Boise, Idaho-based Albertson’s and United announced the proposed merger on Sept. 9. The companies said United would operate its United Supermarkets, Market Street and Amigos grocery stores as a subsidiary of Albertson’s.

Financial terms of the deal were not disclosed. But Albertson’s and United officials referred, at the time, to a pending antitrust review, especially in markets where the two chains compete.

Companies proposing merger transactions valued at $70.9 million or more must submit their plans for review as required by the Hart-Scott-Rodino Act, according to the FTC website.

The dollar threshold for reporting is adjusted annually to keep pace with changes in the U.S. gross national product, the agency’s website said.

Because the FTC and Department of Justice share jurisdiction over merger review, transactions requiring further review are assigned to one agency on a case-by-case basis, depending upon which agency has more expertise with the industry involved, the FTC website said.

The FTC generally has been more involved with scrutinizing retail industry transactions, Carroll said.

Once a merger notification is filed, companies must wait 30 days to close the deal, the FTC website said.

Based on what it finds, FTC can either terminate the waiting period, allowing the merger to proceed, or ask for more information, the website said.

“The vast majority of deals reviewed by the FTC and the Department of Justice are allowed to proceed after the first, preliminary review,” the FTC website said.

The Albertson’s-United merger does not appear on any early-termination lists the FTC posted on its website in September or October. The transaction is still under review, which may have been slowed by the recent federal government shutdown, spokesman Eddie Owens said.

One issue FTC investigators will likely check what competition exists for Albertson’s and United brand stores in their Texas markets, he said.

“My guess is that they would look at it on a city basis,” Carroll said. “And the question is going to be, will this (merger) adversely affect competition, let’s say, in the city of Amarillo?”

The Amarillo grocery market includes Amarillo, United brand stores, Albertson’s, Walmart and a few smaller stores, such as Fiesta Foods.

United has several stores in the city, while Albertson’s just has one.

If FTC officials view single ownership of United brands and Albertson’s stores in Amarillo as a threat to competition, “what they might do is require them to divest the Albertson’s store to a competitor,” Carroll said.

The FTC can place such requirements on retail entities as conditions for its approval, Carroll said.

The FTC and DOJ reviewed an estimated 1,400 merger applications in the 2012 fiscal year, the 35th Hart-Scott-Rodino Annual Report.

Last year, the FTC required Koninklijke Ahold, N.V., the parent company of Giant Food Stores, to sell a supermarket in Newtown, Penn., to settle charges that its proposed acquisition of the Genuardi’s supermarket chain would have allowed Giant and Genuardi’s to unilaterally raise prices in Newtown, Penn., a summary of FTC enforcement actions said.

The transaction also could have increased the likelihood that Giant and Acme “would be able to tacitly or expressly work together to raise prices or otherwise reduce competition in a way that would harm local consumers” in the town outside Philadelphia, the summary said.

The FTC approved the merger with Ahold’s sale of the a supermarket in Newtown, Penn., to McCaffrey’s supermarkets, according to the summary.